Malls' New Spin on Leisure

U.K. Centers Join the Attempt to Lure Shoppers Away From Online Sites

IntoOutdoors will mix shopping and outdoor leisure pursuits. Above, a rendering of its 125-acre development.
IntoOutdoors

By

Peter Evans

Updated Feb. 20, 2013 12:15 a.m. ET

Holding a fishing rod in one hand and filling your lungs with country air, the last thing you might expect to find a minute's walk away is a coffee shop and a clothing store.

But at a mixed retail and leisure development set to open next year on 125 acres of English countryside, visitors will be able to fish and shop as they please.

The project, known as IntoOutdoors, combines traditional stores with outdoor attractions such as two fishing lakes, a cycle track for casual riders and a skateboard park. It uses entertainment to lure customers to shopping centers, then keep them there all day and keep them spending, rather than losing business to online shopping sites.

Other U.K. retail landlords have added multiscreen cinemas, Michelin-starred restaurants, hotels and even a network of country walks to their developments.

"We're trying to make a living experience, rather than just a retail one," says Simon Tothill, director of IntoOutdoors, a £35 million ($54 million) development scheduled to open in the fall of 2014 some 45 miles northwest of Oxford. "If you come here, you're going to stay for a day or even longer and you're going to have a great time. That's increasingly what people want."

The project is overseen by Eagle Land, a property developer in southwestern England, and is expected to include about 30 shops and restaurants on nearly 85,000 square feet.

The idea of providing an all-day experience comes from the U.S., where it isn't unusual for shopping centers to include doctor and dentist offices as well as food halls and entertainment options to complement the usual range of clothing and other retail stores.

But they, too, are becoming more elaborate, and that is translating to the U.K. as well.

"It used to be OK [in the U.S.] for malls to have a movie theater, but now you need one with stadium seating and a health club and restaurant on the side," says Thor Orndahl, managing director of Prudential Mortgage Capital Co. "It's becoming even more important as you try to attract the next generation to keep shopping [in malls] rather than just buying online. It's imperative that these malls stay fresh and exciting."

While the U.K. still lags behind the U.S. in mixing entertainment and retail, the pace of change is increasing as the U.K. economy continues to stagnate and consumer confidence remains low. Around 20% of new shopping center space is being leased for leisure activities, most often restaurants and cinemas, compared with 5% 20 years ago, according to Land SecuritiesLAND1.17% Group PLC, a major U.K. property developer.

For property developers, such changes are a way of fighting against falling property values, which fell 6% in 2012, according to Fitch research. That reflected declining sales on main shopping streets and at shopping centers as customers chose to shop online.

Retailers are disappearing. Already this year, HMV, the U.K.'s last music chain, camera retailer Jessops and the U.K. arm of DVD rental firm Blockbuster have entered administration, a form of bankruptcy, while electrical business Comet and sports store JJB Sports closed their doors toward the end of last year.

Although leisure tenants can pay up to 20% less in rent than traditional retailers, landlords say they are willing to accept that, reasoning that the promise of food and entertainment will keep shoppers on site and spending for longer.

"Retail is not dead; it's changing," says Robert Noel, chief executive of Land Securities, which recently bought a controlling stake in fast-growing X-Leisure, which owns multiplex cinemas, casinos and health clubs across the U.K. "People are going to shops less often, but are travelling farther, and spending more time and money when they do."

Illustrating that shift toward mixed-use, developer British Land Co.BTLCY1.48% recently spent £90 million on a project in Hereford, near Birmingham in central England, that comprises 22 retail units, seven restaurants and a six-screen cinema and is to open next spring.

Other developers say innovation is the best way to keep consumers interested in physical stores when online retailers are offering greater choice and often lower prices as well as same-day delivery.

The company owns 850,000 square feet of retail space around Canary Wharf, home to many of London's biggest investment banks and other financial-services companies. It plans to open a boutique cinema, live music venues and a white-collar boxing club by 2018.

"We're trying to make sure our leisure offer gives people something they want in their lives, but that they haven't got right now," she adds.

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